The author of the economic plan set out by Labour leadership contender Jeremy Corbyn has defended “Corbynomics” in the face of an attack by the shadow chancellor, Chris Leslie.
Richard Murphy, the fair tax expert recruited by Corbyn to draft his
economic policy, deepened divisions on the left by saying “Leslie has
got this completely wrong.”

In an interview on BBC Radio 4’s Today programme, Leslie singled out Corbyn’s plans for a people’s quantitative easing, which he derided as printing money to “magically deal with all the public service and public investment needs that we have”.
He added: “The difficulty is that if that then provokes higher
inflation, if that then means that interest rates go up, who will pay
the price for that? It is the poorest and those on the lowest incomes
who already find the cost of living very difficult.”
Murphy, author of The Courageous State, an acclaimed critique of neoliberal economics, responded by attacking the Labour government’s bailout of the banks.
Speaking on BBC Radio 4’s World at One, he said: “[Leslie] should remember that it was a Labour
government that in 2009 created a programme of QE that eventually
printed £375bn to bail out the banks. It didn’t work. It simply boosted
bank bonuses and bank profits and ordinary people didn’t benefit.”

Jeremy Corbyn at a question and answer meeting in Birmingham on Sunday. Photograph: Lensi Photography/Demotix/Corbis
He added: “People’s QE is fundamentally different. [It] does have the
Bank of England print new money, which is identical to the process that
is use by ordinary banks when they lend to business, but it gives that
money to people like housing authorities, to local councils, to a green
investment bank to build houses, to schools to build hospitals. The very
things Chris Leslie says would not be possible if this programme was
put into place.”
Challenged on Leslie’s point about high inflation, Murphy said: “Any
system of people’s QE would be turned off if we got to a situation of
high wages and full employment, but we are so far from that at the
moment that we have to tackle the low-wage economy and the lack of
productivity in the UK by creating new investment, which is the
foundation for new prosperity.”
“This programme is about creating jobs in every single constituency
in the UK. It is not costless, there will be a small rise in inflation,
but we need it. It would have to be used responsibly, but of course
Jeremy Corbyn understands that.”

Chris Leslie warns hard-left economics risk hurting most vulnerable – audio
Murphy added: “Given the economic situation we face where hundreds of
thousands of people are underpaid and aren’t paying tax because they
don’t earn enough to do so … The real question for Chris Leslie is why
did you support £375bn for the banks when actually very much less would
create jobs in every constituency throughout the UK, which is precisely
what Jeremy Corbyn is offering by adopting this programme.”

Earlier Murphy also defended Corbyn plans to the blog LondonlovesBusiness.
He said: “Jeremy Corbyn wants to create a level playing field for
business by stopping those who are tax-cheating to make sure that all
those who are honest, upon whom we depend, have the chance to prosper
without being undermined by the cheating companies and people who exist
in our economy …
“This is not an anti-wealth programme: it is a spreading the wealth
more widely programme when current tax and social structures do not
deliver that. Everyone, barring banks that specialise in speculation,
would be better off as a result. And the chance of another crisis would
be greatly reduced. This is the economics of responsibility as well as
the economics of wellbeing.”